Let’s start the budgeting series! We’ll just see where this goes, but I’m excited to get a discussion started. Money is one of the toughest subjects for spouses to discuss (although, a practicing family counselor once told me that sex is the most common root reason for divorce, although couples won’t say it.) Budgets are not an emotional issue, especially when you sit down to start one.

First, a budget needs to reflect your household’s needs and wants. Figure out what you’re spending, RIGHT NOW. Our favorite way to do this is mint.com. It’s a completely free website that will link to your transactions, such as credit cards, checking and savings bank accounts, and large financial institutions like Charles Schwab, Morgan Stanley, and the like. Track your spending for a month or two, and make sure to carefully label transactions. If you go to the grocery store and spend $100, but $60 of that is spent on diapers and soap, label those dollars amounts appropriately within the transaction so you can see your true food cost for that trip, and the true cost of diapers and soap. I normally log on once a week or so to label transactions and check to see which charges and checks have come through, and to make sure there are no bogus charges. (We had some troubles with magazines and gym memberships earlier this year that would NOT stop charging us. We worked it out, but I was glad I remembered to check and stay on top of things.)

I prefer to shop almost exclusively with plastic cards, so I can easily track my spending. Paper money is too hard for me keep track of, and too difficult to handle in a store when I’m with my little ones. If you’re concerned about the temptation of using a credit card to excess, use your debit card. But this is just what works for me. We have always paid off our credit card monthly, and debt has never been a temptation, so this works for us.

One you’ve tracked your purchases for a month or two, and your incomes, you’re ready to sit down and see what patterns come out. How much do you spend on food, restaurants, gasoline, services like hair cuts and nails, utilities, etc. How much do you spend on hobbies and charitable donations? Remember, there is zero emotion in this process- you may wish you hadn’t spent $50 a week on cookies, but for right now that doesn’t matter. You spent what you spent, and what you’re looking at right now is a base-line of what your family spends AND makes.

I’m going to talk more about tracking grocery purchases later, but for now we’ll just assume that all groceries are created equal and track your total expenses. I’ll include farmer’s markets, co-ops, etc. in this category, but you can delineate however works best for you.

If wages and income are not salaried, or are regularly spent before being brought home, you might find some surprises in your income. Here are some examples:

With my piano studio let’s pretend I should be making $1,000 a month and plan my expenses accordingly. However, when I look at my records I realize I’m only bringing home $600 a month on average due to cancellations.

I work at a clothing store and based on my hours should be bringing home that same $1,000 per month, but am purchasing at LEAST a shirt every week and only bring home $700.

I work nights at a grocery store and purchase dinner every night at the deli, and end up bringing home only $800.

When my husband was at his previous employer, certain expenses could be taken out of his paycheck such as group purchase tickets to shows and games, postage for packages mailed by the mail room, etc.

Make sure you keep track of spending before AND after you bring your money home!

Just remember- nothing in this process right now is emotional. You are only learning your true income and your true expenses. If you spend $2,000 a month on fancy restaurant meals, so be it. Know that expenses and income will vary throughout the year- you can update your budget later if you need to. For example, utilities are traditionally lower in the summer (unless you regularly water your lawn, for example) and so I can normally budget at least $100 lower for utilities June through September or October. If it’s easier for you to budget a yearly “average” number, and use a budget that allows unused dollars in a category to be included in the available budget for that category in the next month, that’s fine. I prefer to update it when things change, so we can try and be as close to budget as possible every month.

Are you still with me? Go, track your expenses, and next up: setting up the budget!

6 Responses

I don’t know why, but my brain puts on the brakes when I think of budgeting. We have a “worse-case” budget, but I’d really like to know what the actual breakdown of our expenses are.
I’ll check out that mint.com website, wonder if it works with canadian banks?

Su, let me know if it does! I didn’t even think about that, duh 🙂 I’m totally the opposite- unless everything is spelled out in black and white, I can’t function! It’s less a “this is what I’ll let myself spend” and more a “This is is what we do, and this is the outcome- do I have to change anything?”

I do the same with the cards because it’s all laid out for you to analyze. I also enjoy the cash back(Dis* cov* er card) . We pay it off every month, so no finance fees.

Keeping a budget is a constant undertaking. There always seems to be one more thing you could cut back on, and the discovery process is sort of fun. You have to really put your mind to it, and in the end there is a financial reward. I always feel like I beat the system, “broke the code”, or something(giggle).

We recently were able to cut our gas bill in half by taking cold showers. In this hot weather it’s luke warm, so it’s not torture. I turned our gas water heater all the way down, so practically only the pilot light is in use. I fire it all the way up once or twice a week for an hour to keep the water healthy. Now most of our bill consists of fees for delivery , service, and taxes.

It requires so much vigilance. Our weak point used to be going out to eat. We’ve gotten much better at this, but still stumble. Now at least, it’s Chinese take-out or the Barnes & Noble Cafe instead of The Olive Garden, or Red Lobster, or, or, or…..